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Concentration, agglomeration and the size of plants

Lafourcade, Miren and Mion, Giordano (2007) Concentration, agglomeration and the size of plants. Regional Science and Urban Economics, 37 (1). pp. 46-68. ISSN 0166-0462

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Abstract

This paper investigates whether the geographic distribution of manufacturing activities depends on the size of plants. Using Italian data, we find, as in Kim [Kim, S., 1995. Expansion of markets and the geographic concentration of economic activities: the trends in U.S. regional manufacturing structure, 1860–1987, Quarterly Journal of Economics 110 (4), 881–908.], Holmes and Stevens [Holmes, T.J., and Stevens, J.J., 2002. Geographic concentration and establishment scale, Review of Economics and Statistics 84, 682–690.], and Holmes and Stevens [Holmes, T.J. and Stevens, J.J., 2004. Spatial distribution of economic activities in North America, in: J.V. Henderson and J.F. Thisse, eds., Handbook of Regional and Urban Economics, Vol.4, (Elsevier-North Holland, Amsterdam).], that large plants are more concentrated than small plants. However, considering distance-based patterns via spatial auto-correlation, we find that small establishments actually exhibit a greater tendency to be located in adjacent areas. These apparently contradictory findings raise a measurement issue regarding co-location externalities and suggest that large plants are more likely to cluster within narrow geographical units (concentration), while small establishments would rather co-locate within wider distance-based clusters (agglomeration). This picture is consistent with different size plants engaging in different transport-intensive activities.

Item Type: Article
Official URL: http://www.journals.elsevier.com/regional-science-...
Additional Information: © 2006 Elsevier
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C21 - Cross-Sectional Models; Spatial Models; Treatment Effect Models
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R30 - General
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R34 - Input Demand Analysis
Sets: Departments > Geography and Environment
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 19 Mar 2012 12:37
URL: http://eprints.lse.ac.uk/42666/

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